Do I need security for a business loan?
Not always. Plenty of UK business loans are unsecured, meaning the lender takes no charge over property or other assets. What an unsecured loan almost always does carry is a personal guarantee from a director, and businesses commonly confuse the two. Security is a claim on a specific asset; a personal guarantee is a claim on a person.
Funding Circle states plainly that a personal guarantee will be required on its business loans. iwoca asks for one from a company director. Neither is taking security in the property sense, but in both cases a director is personally on the line if the company cannot pay.
What is the difference between security and a personal guarantee?
Security is a legal charge over a named asset. If the business defaults, the lender can take or sell that asset to recover what it is owed. A commercial mortgage is secured on the property; a debenture is a floating charge over the company's assets generally; asset finance is secured on the equipment or vehicle being funded.
A personal guarantee is a promise by an individual, usually a director, to repay the company's debt if the company cannot. iwoca describes it as the director taking personal responsibility for the loan if the business is unable to repay it. No specific asset is charged, but the guarantor's personal position, including in some cases their home, can be pursued through the courts if the guarantee is called.
| Security | Personal guarantee | |
|---|---|---|
| What is charged | A specific asset or class of assets | Nothing specific; the individual's own liability |
| Who is liable on default | The company, to the value of the asset | The guarantor personally |
| Common on | Commercial mortgages, asset finance, secured loans | Unsecured loans, MCAs, invoice finance, and often alongside security |
| Can both apply | Yes | Yes; lenders commonly take security and a guarantee together |
Do unsecured business loans still need a personal guarantee?
Generally, yes. "Unsecured" describes the absence of a charge over assets, not the absence of personal liability. Funding Circle's own page states a personal guarantee will be required. iwoca asks for one from a company director. Rangewell notes that personal guarantees are still commonly required on unsecured loans even where a business has a CCJ on its file.
For a limited company this is how a lender looks through limited liability to the person running it. Directors commonly check whether the guarantee is capped, whether it is joint and several, and whether it survives repayment. The page on personal guarantees goes through those questions.
When does a lender ask for security?
Broadly, when the amount is large relative to the business, when the term is long, or when the product is built around an asset. The pattern below is general; every lender sets its own thresholds.
- Commercial mortgages and property finance: secured on the property itself, always.
- Asset finance: secured on the asset being funded. The lender owns or holds a charge over the vehicle, machine or equipment until the agreement ends.
- Larger or longer-term loans: lenders commonly ask for a debenture over the company, a charge over property, or both.
- Secured loans for businesses with adverse credit: Funding Options lists secured loans among the products most commonly available to a business with a CCJ, precisely because the asset reduces the lender's reliance on the credit file.
How is asset finance secured?
On the asset. In a hire purchase or lease arrangement the funder owns the asset until the final payment, or holds a charge over it, so the security is built into the product rather than added to it. That is why asset finance is commonly available to businesses that would struggle with an unsecured loan: the lender's exposure is to the resale value of a van or a piece of machinery, not to the business's promise to pay.
A personal guarantee is still commonly requested on asset finance, particularly for newer companies or fast-depreciating assets; whether it is required or capped varies by funder. The worked asset finance example shows how the numbers fit together.
When is a secured loan not the right choice?
Where the asset offered as security is the director's home, the business is putting a personal asset behind a commercial risk, and the consequences of default are domestic as well as financial. Where a short-term cash-flow gap is the problem, a long-term secured facility is commonly the wrong shape even if the rate is lower. And where the business already has a debenture in place, a new lender may be unable to take effective security without the first lender's consent.
None of that makes secured borrowing wrong; for property and equipment it is the normal route. The decision is about what is at stake if things go badly, not only the rate. This page is general information, not advice.
Frequently asked questions
Can a limited company borrow without any personal guarantee?
Sometimes, typically where the lender takes strong security instead, where the company is large and well capitalised, or on certain asset finance deals. For most small-company unsecured loans, a personal guarantee is the norm; Funding Circle states one will be required and iwoca asks for one from a director.
Is a personal guarantee the same as putting my house up as security?
No. Security is a charge over a specific asset. A personal guarantee charges nothing in particular but makes the guarantor personally liable, and a lender pursuing a guarantee can seek a judgment against the individual, which can in the end reach personal assets including property. The practical risk overlaps; the legal mechanism differs.
What is a debenture?
A charge over a company's assets generally, rather than one named asset. It is registered at Companies House and gives the lender priority over unsecured creditors. Lenders commonly ask for one on larger or longer-term facilities.
Does a merchant cash advance need security?
An MCA is repaid from card takings and typically has no charge over property, but providers commonly ask for a personal guarantee. Capify, for example, does not publish whether it requires one, so the position can only be confirmed from the funder's own agreement.
Secured and unsecured options, side by side
CapExpand introduces UK limited companies and LLPs to lenders across secured, unsecured and asset-based products. Tell us about the business and we connect you with providers whose criteria fit.
Sources
Checked August 2026. Whether security or a guarantee is required is set by each lender's own documents.
- iwoca support: how iwoca loans work and who is eligible (personal guarantee from a company director; definition)
- Funding Circle: small business loans ("a personal guarantee will be required")
- Rangewell: business finance with CCJs (personal guarantees still required on unsecured loans)
- Funding Options: business finance with a CCJ (secured loans and asset finance as best-fit products)
- Business Expert: Capify merchant cash advance review (personal guarantee requirement unpublished)
Important information
CapExpand Ltd is not authorised by the Financial Conduct Authority and can only complete non-regulated introductions. We work with UK limited companies and LLPs only, for business and commercial purposes. We are not a lender and we do not provide financial, tax or legal advice. We work with a panel of lenders whose particulars are available on request, and we receive commission from the lender if a deal completes, at no cost to you. All lending is subject to status, valuation where applicable and the lender's own checks.
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CapExpand Ltd (Company No. 14433858) is a commercial finance introducer, not a lender. We are not currently authorised or regulated by the Financial Conduct Authority and do not provide financial advice. All information on this page is for educational purposes only. Funding is subject to status and lender criteria. CapExpand will receive a commission from providers at no extra cost to you.